The New Zealand Dollar’s recent run of strength came to an end this week and the ‘Kiwi’ is heading for a five-day decline against the Pound.
The commodity-driven currency is also preparing to end the week lower against the US Dollar.
Since the Reserve Bank of New Zealand increased interest rates earlier this year the New Zealand Dollar has been riding high, but the odds of the central bank hiking borrowing costs further dipped this week as a result of less-than-impressive domestic news.
The unexpected slowing of domestic inflation took a toll on the currency, as did the news that the price of New Zealand’s main export (dairy) fell for a fifth month.
Ukraine-inspired risk aversion also had an impact.
The Pound, meanwhile, has surged overnight and managed to approach a five-week high against the ‘Kiwi’.
Encouraging UK employment data boosted Sterling against the majority of its most traded currency counterparts and the British asset looks set to hold these gains into the long Easter weekend.
In the opinion of Foreign Exchange Strategist Boris Schlossberg; ‘UK wage growth rose above the rate of inflation for the first time in five years sending Sterling soaring. The beat in labour data numbers indicates that the UK economy continues to enjoy the best growth in the G7 universe and clearly sends the BoE to the front of the line in the race to hike rates amongst the advanced industrialised nations of G7.’
The GBP to NZD pairing was able to hold gains even as New Zealand’s consumer confidence index advanced from 132 to 133.5 in April, a 1.1 per cent increase.
A separate measure of current conditions advanced from 125.7 to 130.3 while the future conditions gauge slipped from 136.2 to 135.8.
The result prompted this response from economist Cameron Bagrie; ‘The economy is expanding rapidly, more jobs are being created, the housing market is still buoyant, the high New Zealand Dollar is keeping the price of imported goods and those big-ticket items suppressed. Prospects for wages to move up are improving by the day. That’s a chipper combination.’
A lack of UK data could restrain Pound to New Zealand Dollar movement before markets close for a four-day weekend.
Next week New Zealand developments to look out for include domestic credit card spending figures and the Reserve Bank of New Zealand’s rate decision.
As China is one of New Zealand’s main trading partners Chinese manufacturing PMI will also be of interest.
New Zealand Dollar (NZD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
New Zealand Dollar,
,US Dollar,0.8629,
New Zealand Dollar,,Euro,0.6235,
New Zealand Dollar,,Australian Dollar,0.9214,
New Zealand Dollar,,Pound Sterling,0.5127,
US Dollar,,New Zealand Dollar,1.1594 ,
Euro,,New Zealand Dollar,1.6051 ,
Australian Dollar,,New Zealand Dollar,1.0853,
Pound Sterling,,New Zealand Dollar, 1.9517,
[/table]
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